Grey Matters Blog
Seniors Tax Credits
by Tiffanie Ujfalusi
Category: Financial, Guest Articles on Mature Adult Issues
With all the talk of the Family Tax Cut announced for people with children under 18, a lot of seniors have been asking... "What about us?" It seems like a good time to go over some of the most common Tax Credits and benefits relating to seniors and how we can help to make sure you are getting your best advantage.
Age Amount (Transferable between spouses if not used)
The age amount is a credit of up to $6,916 for people over 65 if their income was under $34,873. If you earned over this, the credit is reduced based on income up to an income of $80,980.
Pension Income Amount
If you are reporting eligible pension income, you are entitled to claim a credit of $2000. If your pension is eligible for Pension Splitting then you can also transfer a minimum of $2000 to your a spouse who doesn't have a pension of their own (even if they have income of other types and are not a senior themselves) in order to cancel out $2000 of the Pension income from your tax return.
The Elected Split-Pension Amount allows you and your spouse to agree to transfer up to 50% of your eligible pension income to your spouse in order to take advantage of lower tax brackets and other benefits that may relate to a lower net or taxable income. Sometimes pension splits are done in order to access benefits such as subsidized nursing home fees even if the taxes are not affected or should be avoided if raising a persons income would reduce their subsidy.
RRIF and RRSP Annuities
Some people only withdraw the minimum required from these Plans in order to keep their taxable income lower, but if benefits like the Guaranteed Income Benefit aren't being received, then you may be able to increase your annual income to fully use all your tax deductions without actually paying any tax.
Donations and Political Contributions
Because donations can be used for up to 6 years they can be combined together to use in one year, or keep any unused donations to use in a future year, depending on what is most beneficial. Also donations made "in kind" to certain organizations could be made when downsizing and disposing of personal items (such as Habitat for Humanity taking household and construction items or donating art or collections as Cultural Gifts).
Disability Tax Credit
If you or a family member are restricted in the "Activities of Daily Living" you may be entitled to this credit. A form T2201 has to be filled out by your doctor describing your limitations so that CRA can determine if you are eligible, but many seniors who use a walker for example would qualify. The credit can be applied for retroactively and returns amended up to 10 years.
While medical expenses have to be reduced by 3% of your income, seniors often have a larger amount of expenses than other individuals. Medical expenses can be combined for a couple (and dependants if you are also paying them for a family member) in order to get a better benefit. Medical expenses can also be used for 12 consecutive months that end in the current tax year, and not necessarily a Calendar year.
Many types of expenses are often overlooked as being eligible medical expenses. While not an exhaustive list this may give an idea of the most commonly forgotten expenses.
Prescriptions (most pharmacies will provide an annual statement on request instead of keeping and totalling each receipt but make sure to get a breakdown of details as well as the total as the government will request it in a review).
Health and Dental Plan Premiums (but not provincial plans), especially those deducted from your Pension or Pay Cheque. While these sometimes show on your tax slip this is relatively new and not done by most pension providers.
Emergency Medical Travel plans, if you pay for medical insurance to cover you while traveling.
Physiotherapy, Massage Therapy, Chiropractic, and most other therapies
Medical Travel, when travelling outside the area of your home (minimum 40km for travel or 80km for travel and accommodations) for medical treatment or assessment.
Assistive Devices, hearing aids, walkers, crutches, wheelchairs, lift chairs, medical beds, rentals of devices, etc. Plus batteries or maintenance or repairs to those devices.
Notes from doctors or reports written about you for medical purposes.
Glasses and eye exams, plus contact lenses. Laser eye surgery to correct vision.
Dental, Dental Implants, Orthodontics, Dentures, etc . While cosmetic procedures are no longer allowed, most dental procedures are not considered cosmetic.
Household Renovations meant to accommodate a person with a disability (or in BC a Senior) with adaptations to a residence to better meet their needs.
Nursing Home Fees, or Attendant Care (such as Home Care). A portion of costs associated with a Retirement residence may be considered Attendant Care, check if your residence issues you a receipt that relates to the portion for assistance provided by the employees for Preparation of Meals and Laundry, etc.
Bathroom Aids or Supplies such as Depends
other medical supplies if dispensed by a Pharmacist
Naturopath Visits (not vitamins)
Capital Gains Exemption for Principal Residence Change of Use
If downsizing or moving into independent living and renting out your family home, you may not be required to convert the property to an "Income Property" for the purposes of paying Capital Gains tax and keep your exemptions. This is done by filing an Election with Canada Revenue Agency to keep the home as your Principal Residence even though you no longer live in it.
Family Caregiver Amount
If you care for a spouse or family member who has a low income, you may be able to claim this $2000 credit if their income was below $11,138.
BC Seniors Renovation Tax Credit
If adapting a home for a Senior in BC that owns or is resident in the home, the expenses can be claimed up to $10,000.
Low Income Benefits (most of these apply to BC)
For seniors who have low income there may also be some programs you could be missing out on which we have helped many of our clients apply for:
Guaranteed Income Supplement (GIS) is added to OAS for low income seniors
BC Bus Senior Pass Program
Medical Services Plan Premium Assistance, if your family "adjusted" net income is under $30,000 you can have your premiums reduced or eliminated. Adjusted means you also get to add another $3000 for each of the following, a spouse, each child, you are over 65, your spouse is over age 65, you or a family member have a disability tax credit. Once these are added together that is the income you can have to qualify for the reduced rates. If you qualified and never applied you can do so retroactively up to 5 years to receive a refund of premiums.
Fair Pharmacare, if you haven't registered it may be a good idea. After you reach your annual deductible for prescriptions Fair Pharmacare will pay 70%-100% of your prescription costs. If the annual deductible is too high you can phone them and request it be split evenly over each month.
L.I.F.E. Pass or reduced cost pass at your local recreation centre such as the YMCA. To promote inclusion individuals and families who have a certain income can receive free or significantly reduced passes to access recreation and swimming facilities and registered programs such as Yoga or other fitness and social programs. Those who need support can often also access a companion pass for free (In Victoria contact Recreation Integration).
Check our website for additional programs or contact us to help point you in the right direction. Pain Free Tax & Bookkeeping Service Ltd provides mobile tax service in Victoria, BC and the surrounding area to accommodate clients who prefer or need service in their own homes. We also can do onsite booking for our Mobile Tax Clinic to serve organizations or facilities.
Local: 250-483-1987 Toll Free:1-844-EZ-TAXES